45 posts categorized "New Jersey Consumer Fraud Act"

Thursday, February 20, 2014

Top News Clips for the Week of Feb. 15-21

A selection of the need-to-know civil justice news for the week of February 15-21, 2014.

Continue reading "Top News Clips for the Week of Feb. 15-21" »

Wednesday, February 13, 2013

Subway is the latest example of why NJ's Consumer Fraud Act needs fixing

We can tell you that New Jersey’s courtrooms are among the nation’s easiest in which to file a ridiculous lawsuit, but sometimes the weaknesses of the NJCFA speak for themselves. 

Two New Jersey residents contend that the size of their ‘footlong’ sub from Subway fell short of twelve inches.  And with a straight face, they were able to file a lawsuit under the New Jersey Consumer Fraud Act with ease.  Their lawyer is seeking class-action status on behalf of everyone who’s purchased one and meets the criteria. 

A recent NJ BIZ article (Advocates hope bill takes bite out of N.J. fraud law / Jared Kaltwasser, 2/4/13)) examines a possible remedy for the New Jersey Consumer Fraud Act, sponsored by Assemblyman Craig Coughlin.  A-3264 has been referred to the Assembly Consumer Affairs Committee. 

Thursday, March 01, 2012

Touting tort reform before business

Read Andrew Kitchenman’s story in NJ BIZ about the prospect for lawsuit reform this year:

 

Marcus Rayner HeadshotAdvocates of lawsuit reform are touting the possibility of significant bills to reform the state's laws governing class action and consumer fraud cases, signaling what may become the biggest opening for changes since the 1990s.

A pair of bills introduced this session would limit the cost to post bonds for corporations that are appealing judgments, and would allow the subjects of class-action lawsuits to directly appeal the determination that a "class" exists.


The state's most prominent lawsuit reform advocate may be Marcus Rayner, president of the New Jersey Civil Justice Institute, which launched in 2007 to bolster lobbying on tort reform and related issues.

Rayner said the political climate is shaping up to be good for the bills.

"I think the business community has been impressed with this legislative leadership's interest with helping," along with that of Gov. Chris Christie, Rayner said.

Rayner said tort reforms in other states — including North Carolina, Wisconsin, Tennessee and Texas — increased pressure on New Jersey.

"A climate of excess litigation drives up the costs for everybody, from the business owner to the consumer," he said.

Read full story.

Friday, July 15, 2011

Session Recap

It’s been a quiet week for civil justice reform.  Unsurprising, since failed attempts to override some of the Governor’s vetoes, school funding, and speculation over which congressional district will be eliminated during redistricting have dominated New Jersey politics.

 To recap the 2010-2011 Session thus far, NJLRA supports the following bills:

  Bills

Monday, June 13, 2011

Scam exposed: plaintiff hired a lawyer before buying product!

We already know that New Jersey is infamous for its abuse of the Consumer Fraud Act.  The one where a plaintiff doesn’t have to actually be defrauded in order to collect damages, lets attorney’s fees inflate nearly unchecked, and feeds the ‘litigation tourism’ industry by default.  Yes, that infamy. 

Fortunately, civil justice seems to have come down against trial lawyers in one case.  A federal court in New Jersey recently denied class action status for anyone who purchased “all natural” Arizona Iced Tea without realizing that it had high fructose corn syrup.  The problem, according to a report in Forbes Magazine, is that plaintiff Lauren Cole consulted with an attorney before purchasing the product.  And when you’re trying to seek class certification on behalf of a bottomless number of people, it helps to have at least one person file a claim. 

 

Excerpt, pages 3 – 4 of the decision:

The factual and procedural record in this case is confused on at least one key question: whether Plaintiff’s qualifying purchase occurred before or after she concluded that Arizona beverages containing HFCS were not natural as labeled…

…During the course of discovery of this case, Plaintiff produced for Defendants a retainer agreement she signed in anticipation of this lawsuit. (Donovan Decl. Ex. C.)  In the agreement, Michael Halbfish, Esq., one of Ms. Coyle’s current attorneys in this litigation, agreed to represent Ms. Coyle in an anticipated class action seeking damages and injunctive relief against the Defendants in this matter for their deceptive

practices in marketing beverages containing HFCS as “all natural.” (Id. ¶ 1.2.)  The agreement was signed on August 9, 2007, more than seven months before Plaintiff has alleged that she was misled by defendants’ “all natural” labeling in her purchase on March 30, 2008.  (Id. ¶ 10.1.)

Friday, April 29, 2011

Consumer Fraud Reform Bill, S-2855, introduced in the Senate

Senator Jeff Van Drew (D-Cape May) introduced the companion bill to A-3333 on Thursday, which would reform New Jersey’s oft-abused Consumer Fraud Act.  The bill number is S-2855.

A-3333 has received bipartisan support in the Assembly and is sponsored by Assemblyman John McKeon (D-Essex) and co-prime sponsors Ralph Caputo (D-Essex) and Dominick DiCicco (R-Glouster).   It is cosponsored by Assemblywomen Amy Handlin (R-Monmouth), Mila Jasey (D-Essex), Elease Evans (D-Passaic), and Alison Littell McHose (R-Sussex). 

Wednesday, April 27, 2011

Where to file a whacky class-action lawsuit? New Jersey, of course!

New Jersey’s Consumer Fraud Act is among a minority states which allow “litigation tourism” – that is, permitting non-New Jersey residents to sue under the Act.  And because New Jersey’s CFA is so broadly constructed, many out-of-staters and their attorneys are eager to jump on the class-action bandwagon

Case in point:

Lawsuit claims Benjamin Moore 'zero VOC' paint has foul odor

Apr 26, 2011 5:17 PM  | Via Consumer Reports

Benjamin_Moore_Natura_Semi-Gloss-thumb-240xauto-576

Describing the smell of some batches of Benjamin Moore’s Natura paint as “horrid,” two law firms filed suit against the paint maker today on behalf of a woman who claims she had to move out of her home because the odor was so strong. Filed in the U.S. District Court of New Jersey, the complaint initiates a class action suit, according to Lexington Law and Scott + Scott LLP.

According to court papers, Marlene Sway, the plaintiff, painted several rooms in her California home with Natura paint in 2009. Soon after she noticed a foul odor and areas where the paint failed to dry, according to the complaint. She eventually moved out.

--
Moral of the story?  Lawyers love to file lawsuits under New Jersey's Consumer Fraud Act, especially when they stink.

Tuesday, March 29, 2011

Read NJLRA’s op-ed in the Home News Tribune & Courier News

Lawsuit abuse a continuing drag on NJ business

By Marcus Rayner | March 29, 2011

“From a college student suing a Chinese restaurant for soup she spilled on herself (Somerset County), to a drunken motorcyclist who drives into a parked car and sues a restaurant (Ocean County), lawsuit abuse has an economic impact on businesses in every corner of the state. Every dollar spent fighting nonsense lawsuits is a dollar not spent on innovation or job creation, and it doesn't need to be this way.”

 Several hundred miles from here, Illinois business owners are learning about a place with an abundant supply of workplace talent and a high-quality lifestyle sure to make any entrepreneur envious. Weary from crippling tax hikes, a labor shortage and a shrinking consumer base, Illinois business owners can only dream about this land of milk and honey: New Jersey.

"Well-educated, diverse talent pool," reads the ad, placed by New Jersey Gov. Chris Christie. Want to start a business? "Innovative financing, incentive and assistance programs. Exceptional quality of life."

The catch? Here in New Jersey, businesses are vulnerable to lawsuit abuse. Everything the ad says about New Jersey is true. Christie's efforts to improve the business climate in New Jersey, combined with our state's existing assets make New Jersey fertile grounds for entrepreneurship. His outreach to the national business community is both constructive and sorely needed as we seek to reclaim our economic footing here in New Jersey. And business retention as well as recruitment will be critical to our economic growth over the next decade, a point that leaders in both political parties have made.

Click here to read entire piece.

Monday, March 28, 2011

OLS: NJ’s unemployment rate lags due to “changes” in “high end job market”

We’ve mentioned in previous posts that New Jersey’s pharmaceutical companies shed 7 percent of their workforce last year, according to a report published by the Healthcare Institute of New Jersey

As the Senate Budget Committee began its budgetary hearings for 2012 today, Senator Paul Sarlo asked Legislative Budget Officer David Rosen why, “despite ambitious pro-business policies touted by the governor,” the Garden State’s unemployment rate continues to exceed 9 percent. 

“The fact that N.J.’s high end job market has largely been telecomm and pharmaceuticals – [those are] two industries that have been transformed largely beyond our control,” Rosen replied. 

Of course, a third job field may have had an impact on the previous two: litigation tourism. 

A cost-free way to stop the hemorrhaging of high end jobs is to enact changes to New Jersey’s Consumer Fraud Act, which has become one of the most abused laws of its kind.  Assemblyman John McKeon has introduced legislation, A-3333, which would make the law less hostile for high-end industries in New Jersey. 

Politicker NJ’s Darryl Isherwood has additional commentary on Monday’s budget hearing.

Friday, February 25, 2011

Caught on Tape: “Some people fake slip and falls for a living.”

Abc_gma_leamy_110223_me
Fraudulent slip-and-fall duos have become so pervasive in the last three years that many stores are investing in hidden cameras to catch the perpetrators in the act. 

ABC’s Elizabeth Leamy reports on the spike in suspicious slip and fall claims.  Some of what the camera catches is amazing – from a man who buys a hot dog, then places it in a store isle so his accomplice can intentionally slip, to a woman who fixes her hair before lying down in artificial distress. 

The National Insurance Crime Bureau says that “suspicious claims” are up 24 percent from 2008. 

Leem notes this number could be even higher, because many businesses quietly pay off these claims to make them go away.  Even when fake falls are caught on tape, “fake slip and falls still have the effect of driving up prices for all of us,” she says. 

Jim Quiggle of the Coalition Against Insurance Fraud says that indeed, “some people fake slip and falls for a living.” 

 You can watch the report here, via ABC’s website

Tuesday, February 22, 2011

Governor: NJ will double R&D tax credit

Governor Chris Christie’s budget address included several tax cut proposals, the first of which would be significant to one of New Jersey’s signature industries: pharmaceuticals. 

“We will double our State Research and Development Tax credit to encourage High Tech and Bio-Tech entrepreneurs to create their next great discovery, and the jobs that go with it, right here in New Jersey,” he said. 

New Jersey’s pharmaceutical companies have been shedding jobs over the past few years, according to the Healthcare Institute of New Jersey. Doubling New Jersey’s Research and Development Tax credit, as encouraging as it is, address our hemorrhaging of pharmaceutical jobs in part.  Imagine how much further this proposal would reach if coupled with meaningful tort reform legislation to address the assault on the industry by the trial bar

A-3333, which would reform New Jersey’s Consumer Fraud Act, comes to mind.  After all, why should New Jersey settle for “Hellhole” status when it has the potential to host High Tech and Bio-Tech entrepreneurship? 

The prepared text of the Governor’s budget address is available here

Friday, February 18, 2011

A-3333 gains support

Assemblywoman Alison Littell McHose (R-Sussex) signed on as a cosponsor of A-3333, increasing the total number of sponsors and cosponsors to seven.  She joins primary sponsors Assemblymen John McKeon (D-Essex), Ralph Caputo (D-Essex), and Domenick DiCicco (R-Glouster), and cosponsors Assemblywomen Amy Handlin (R-Monmouth), Mila Jasey (D-Essex), and Elease Evans (D-Passaic). 

A-3333 calls for reforms to New Jersey’s oft-abused Consumer Fraud Act (CFA).  If enacted, A-3333 would do the following:

  • The individual cause of action provided for under the CFA would be available only to a “consumer,” who is defined as an individual and specifically excludes businesses;
  • Require that a plaintiff relied to his detriment on the use or employment of the unlawful method, act, or practice;
  •  Give the court the discretion to award damages appropriately, not to exceed three times the amount of actual damages sustained by the consumer;
  • Provide that the CFA applies only to transactions which occur in New Jersey.

More information about New Jersey’s CFA is available on NJLRA’s website

Monday, January 31, 2011

Good reading: Tort reformers have momentum in NJ

Sherman “Tiger” Joyce, president of the American Tort Reform Association (ATRA), had the following to say about New Jersey’s prospects for civil justice reform in The Metropolitan Corporate Council publication:

“Of course, the litigation industry also remains strong throughout New Jersey, home to once-and-future judicial hellholes, and ATRA expects it to again push an expansion of wrongful death liability while actively opposing consumer fraud reform. But tort reformers, backed by Governor Chris Christie, have some momentum. They support three affirmative reform bills already filed during the current legislative session. One seeks to limit appeal bonds to the total value of the monetary judgment or $50 million, whichever is less. Another would revise the individual's cause of action under the Consumer Fraud Act and make other revisions regarding applicability (see trial lawyers' opposition noted earlier). The third pertains to liability, standards of care and insurance coverage for medical malpractice actions.”

Thursday, January 13, 2011

Salty Claim Against Denny’s Doesn’t Float in Court

As you may remember, New Jersey’s Consumer “Fraud” Act is so broadly constructed that a Tinton Falls resident was able to sue the Denny’s restaurant chain last year, claiming that he (and the public at large) had no idea his favorite “Moons over my hammy” dish was “loaded up with the salt.”  Plaintiff Nick DeBenedetto argued that it amounted to consumer fraud (in the State of New Jersey, at least).  He was being treated for hypertension, after all.  An advocacy group and local attorneys adopted the cause on behalf of Denny’s patrons, unsuspecting or not, in a class action lawsuit.    

Fortunately, the lawsuit was dismissed.  And a state court of appeals upheld this decision, according to a report by Ken Serrano in The Home News Tribune.

“Neither plaintiff nor the punitive class he claimed to represent asserted any physical injury or harm as a result of defendant’s failure to disclose the sodium content,” the court said in its decision.  DeBenedetto will not be permitted to sue under the New Jersey Consumer Fraud Act, but he may be able to pursue an action under the Products Liability Act. 

Commentary suggested that the plaintiff reimburse Denny’s for the costs it incurred.  Unfortunately, history suggests that honest consumers are usually the ones who end up bearing these costs.  Real consumer protection doesn’t mean more ways to sue – it means keeping junk litigation like this out of the civil justice system. 

Wednesday, December 29, 2010

2010 in Review

            I am happy to report that the 214th NJ legislature has taken positive first steps toward reforming New Jersey's civil justice climate.  Most notably, A-2473/S-480, which extends appeal bond caps to all industries, is now on second reading in the General Assembly.  We also saw efforts to reform New Jersey's oft-abused Consumer Fraud Act with the introduction of A-3333.  Finally, the Assembly Health and Senior Services Committee held a hearing earlier this year on A-1982, which would reform New Jersey's medical malpractice environment for our state's doctors.    Collectively, these initiatives would discourage frivolous class-action litigation and enhance the integrity of scientific evidence admitted in our courts.  NJLRA would like to thank all of the bills' sponsors and the legislative leadership in both parties for their commitment to advancing pro-business legislation.  Together with our supporters, we are able to educate the legislature on the importance of these initiatives.  Senator Raymond Lesniak (D-Union), who was NJLRA's keynote speaker at our Fall Membership Luncheon, said NJLRA's proposals will be a "cornerstone" of the state's effort to reposition New Jersey's economy for long-term growth.  We enthusiastically accept Senator Lesniak's wisdom. 

            If you think you have seen more of NJLRA lately, it's because we have increased efforts to get our message out.  In 2010 we re-launched our website, where you can find any of the eight op-eds I authored over the past year.  NJLRA has also been the focus of several news stories and has written a dozen letters to-the-editor.  I encourage you to visit NJLRA's Blog and Facebook page.  You can also follow us on Twitter

We continue to make an effort to reach out to New Jersey's small business community.  A recent poll we conducted in conjunction with the Monmouth University Polling Institute suggests that many of the Garden State's small businesses feel vulnerable to abusive lawsuits.  We are hoping to articulate the unique needs of New Jersey's small business community as we meet with legislators across the state. 

      As we have said in the past, New Jersey cannot recover from this recession without sound policies that support job growth.  With limited resources to fund tax breaks or business incentives, legal reform offers policymakers in Trenton a revenue-neutral policy change that can send a very strong message to employers all across the nation.  States which have enacted tort reform, including Texas, now lead the country in job growth and physician retention. 

            Thank you again for your continued support.  I am confident that we will continue our path toward reforming New Jersey's civil justice laws in 2011.  Please save the date for NJLRA's first Membership Meeting of 2011, which will be held on Tuesday, March 8th at noon at the Trenton Country Club.  We will discuss our plans for 2011.  As always, please do not hesitate to contact me if I can ever be of assistance. 

Thursday, December 16, 2010

Read NJLRA’s op-ed in The Record

Small businesses have historically played a crucial role in getting the workforce back on track after economic disarray, and in New Jersey, they have served a crucial cultural purpose as well. The fact that nearly one-in-five small businesses has seriously considered leaving New Jersey should set off alarms.

FOR MANY OF US it may be hard to conceptualize, but there was a time in New Jersey’s recent history when our state was a beacon for the American Dream instead of a disincentive to it.

An abundance of natural resources, an educated workforce and low business costs made the Garden State ripe for the mom-and-pop shops and diners that at one time penetrated nearly every Main Street across the state.

Read NJLRA’s op-ed today in The Record.

Monday, December 13, 2010

Labor, business leaders support civil justice reform

Njseed

 

NJLRA's executive director, Marcus Rayner (2nd from left), with NJBIA Vice-President Christine Stearns, New Jersey Petroleum Council President Jim Benton, and Scott Ross, also of the New Jersey Petroleum Council.  

 

Litigation abuse drives up business costs and inhibits job growth, according to the New Jersey Society for Environmental, Economic Development (NJ SEED).  The organization, which is a broad coalition of New Jersey’s business and labor leaders, say that a vibrant life science industry is key to growing New Jersey’s economy. 

In its 2010-2011 State Issues Briefing book, “Mapping Our Way to Prosperity,” NJ SEED argues that preserving New Jersey’s status as the “medicine chest of the world” is critical, and tort reform – particularly cracking down on litigation tourism – is sorely needed by the $30 billion life science industry.  While New Jersey remains a key location for 24 of the world’s 30 largest pharmaceutical giants, weak civil justice laws have helped give momentum to Massachusetts, North Carolina, Texas, California, and Indiana, which threaten to outpace the Garden State’s industry growth. 

A decline in the life sciences industry would pose a significant strain on New Jersey’s economy.   According to the report, New Jersey’s life sciences currently do the following:

  • Provide more than 211,000 jobs, directly or indirectly, throughout the state;
  • Spend more than $1.5 billion annually in capital construction projects throughout New Jersey;
  • Spend nearly $8 billion annually on research and development;
  • Award over $4.6 million in vendor contracts to local businesses; and
  • Give more than $210 million in philanthropic contributions to cultural, nonprofit, and educational organizations throughout the state.

A copy of NJ SEED’s briefing book is typically shared with the Governor, members of the Legislature, and other policy leaders in New Jersey. Let’s hope they heed the call for civil justice reform on page 46. 

 Click here to read the full report and learn more about NJ SEED.  

Sunday, December 12, 2010

There’s some good stuff here,

but where is the tort reform?

Politicker NJ: Senate releases ‘toolkit for business’ bills

TRENTON – The senate Budget and Appropriations Committee approved the release of some economic stimulus bills, part of a 30-bill packet fast-tracked by the Democratic majority as a foil to Gov. Chris Christie’s municipal toolkit.

Read it here.   

Sunday, November 28, 2010

Check out NJLRA's op-ed in today's Times of Trenton!

State's small businesses have a lawsuit problem

Sunday, November 28, 2010
SPECIAL TO THE TIMES

For many of us, it may be difficult to imagine, but there was a time in New Jersey's recent history when our state was a beacon for the American Dream instead of a barrier to it.

An abundance of natural resources, an educated work force and low business costs made the Garden State ripe for the mom-and-pop shops and diners that at one time populated nearly every Main Street across the state. New Jersey shone especially brightly to would-be small-business owners across the Hudson River, and these attributes helped lure a good number of them from the five boroughs.

It's almost inconceivable that within the span of a generation, the New Jersey we knew has become one of the most hostile business environments in the United States.

Read full op-ed here

Tuesday, October 19, 2010

Accutane, and New Jersey’s booming litigation tourism industry

I’m going to go out on a limb and say that Accutane isn’t more dangerous in New Jersey than it is in Nebraska.  Or Illinois.  Or Texas, for that matter. 

Yet, more than 400 lawsuits have been filed in the past two months in New Jersey, claiming that its manufacturer, Roche, failed to warn users of its side effects, which are said to include gastro-intestinal and cardiovascular complications.  5,000 lawsuits have been filed nationwide; nearly 1,600 cases are pending in New Jersey. 

Why the flood of lawsuits here in New Jersey, as opposed to any other state?  No, it’s not because New Jerseyans are more acne prone.  Not all of the plaintiffs even live in New Jersey, in fact.  News Inferno.com notes that “the spike in Accutane claims filed in New Jersey come on the heels of a court ruling there that found the statute of limitation for such lawsuit should be based on when plaintiffs discovered there could be a connection between Accutane and their bowel disorder.” 

Essentially, the decision opened the floodgates for litigation – and in New Jersey, a lawsuit can yield a nice profit (see In Atlantic County, the trial bar hits the jackpot, and consumers pay – again, for a $25.1 million example). 

Thursday, September 30, 2010

Bill addresses New Jersey’s Consumer Fraud Act

Assemblyman John McKeon (D-West Orange) introduced legislation to reform New Jersey’s often abused Consumer Fraud Act.   A-3333 calls for the following:

  • A cause of action under the consumer fraud act must be filed by a consumer – not a business.
  •  The plaintiff in a consumer fraud suit must have “relied to his detriment on the use or employment of the unlawful method, act, or practice” (i.e., the consumer suing under the consumer fraud act would have actually have had to been defrauded). 
  • In a blow to the “litigation tourism” industry, the New Jersey Consumer Fraud Act would apply only to transactions which occur in New Jersey.  Sorry, ladies and gents from out-of-state.
  • Finally, when a violation of the Consumer Fraud Act is found to have occurred, the Court has discretion in awarding damages, not to exceed three times the amount of the actual damages the customer sustained.  The awarding of attorneys’ fees would also be limited to one-third of the judgment or $150,000. 

A-3333 addresses many of the concerns NJLRA has voiced about the New Jersey Consumer Fraud Act.  Props to Assemblyman McKeon for his leadership to help stop the abuses of New Jersey’s Consumer Fraud Act. 

Wednesday, September 15, 2010

Greed of epic proportion: $99,000 in fees on a $650 judgment

We already knew that New Jersey’s Consumer Fraud Act is among the nation’s most exploited (see Denny’s, et. al), but this one manages to stand out. 

According to Court documents, Mary L. Walker purchased a new 2002 Nissan from Route 22 Nissan, Inc.  She realized that the dealership charged her $140 in vehicle registration fees (instead of the $88.50 MVC actually charges) and kept the difference. 

I don’t know whether the plaintiff asked for a refund before filing her lawsuit, or if she went straight to court, like the plaintiff did in the case against Warnock DodgeIn any event, Walker v. Giuffre was heard by Middlesex County Superior Court Judge Alexander Waugh, Jr. Walker said that Route 22 Nissan violated the Consumer Fraud Act (CFA) and the Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA), and was awarded $654.40 for her trouble. 

The plaintiffs’ attorneys requested fees.  But, as the lawyers for Nissan pointed out, the same attorneys are also of counsel in Cerbo v. Ford of Englewood, Inc.  Many if not most of New Jersey’s automotive dealers are named as defendants in this class action suit, filed in Bergen County, for nearly the same violation of the CFA.  They argued that their fees should be covered under the Cerbo lawsuit. 

Instead, Judge Waugh determined that the billing records by plaintiffs’ attorneys in Walker v. Giuffre were “fair and reasonable.”  A $99,252 attorney’s fee plus $5,431 was bestowed upon Nissan. 

Fortunately, an appellate court overturned it.  The panel said that Judge Waugh should not have used his own personal experience to gauge the attorneys’ hourly rate. 

The attorneys now say that they will likely have to request higher fees going forward, according to David Gialanella’s story in the New Jersey Law Journal

“At some point we’ll get paid,” the attorney said.  “It’s just a question of how much.”

Friday, September 03, 2010

Wishing everyone a happy and safe Labor Day weekend from NJLRA

And, remember to check those warning labels before eating hot dogs!

Friday, August 13, 2010

Remember Accutane?

New Jersey’s weak evidentiary standards make it difficult for pharmaceuticals to defend themselves from litigation.  Fortunately, one company might be getting a second wind thanks to an appellate court. 

In previous LRW posts, we told readers about how excessive litigation helped drive Accutane off the market.  It emerged in 1982 and was once one of the company’s signatory drugs, having been prescribed to over 13 million people with severe acne.  Critics say that it is linked to Irritable Bowel Syndrome, birth defects, and depression in a small number of patients (although, I struggle to think of any contemporary prescription drugs which do not list these aliments as possible side effects…).  Nevertheless, Accutane’s reign officially ended in 2009, when multi-million dollar judgments and legal fees made its production unsustainable.  In one such instance, as you may recall, an Alabama resident received $25.1 million from the drug’s Swiss manufacturer, Roche, which has a sizeable office in Nutley. 

Fortunately, Bloomberg News reports that Roche has won the reversal of a $10.5 million Accutane award on appeal.  The reason? The judge – Carol Higbee – didn’t let the defense present statistics on the total number of Accutane users until the trial’s end.  The appellate court says that the judge’s decision improperly barred Roche from using evidence about the medication’s use. 

Bloomberg reports that in the 89-page decision, the appellate court said “Roche was unduly impeded at this trial from adducing and advocating numerical proofs that could have potentially and reasonably led a jury to reach a different verdict.”

The case, Kendall v. Hoffmann LaRoche, Inc., was filed by Utah resident Kamie Kendall in Atlantic County Superior Court, one of the nation’s so-called “Judicial Hellholes.”  A jury originally found that Roche’s warnings about possible bowel disruptions were not adequate.  The appellate court, however, said that the trial didn’t provide “a full and fair opportunity for Roche to present and advocate the relevant numbers evidence.” 

In light of the decision, Atlantic County’s Judge Higbee has delayed the jury selection in another Accutane lawsuit she was scheduled to hear.  This case, filed by James Marshall, will be calling Martin Sheen and others to testify that Accutane damaged his colon, whereby killing his acting career.  Entertainment sources say that James Marshall thought he could have been “the next James Dean.”

Wednesday, August 11, 2010

Judge cuts down inflated settlement in Volkswagen case

New Jersey’s weak Consumer Fraud Act almost helped make attorneys $9.4 million richer.  Thanks to U.S. Magistrate Judge Patty Shwartz’s diligence and attention to detail, however, consumers were spared having to absorb this expense.

Here are the facts.   As reported in the New Jersey Law Journal, some Volkswagen owners complained that their 1997 – 2005 Passat, Jetta, New Beetle, Golf, and Touareg models leaked in heavy rain.  In some cases it damaged the car’s interior, or its contents, varying in severity.  A nationwide class action lawsuit was filed in Newark, under New Jersey’s Consumer Fraud Act.  They were also accused of breaching express and implied warranty and the “duty of good faith and fair dealing.” 

In Del Guercio v. Volkswagen of America Inc., two firms represented the 5.5 million class members, representing 3 million vehicles.  The lawyers estimated a settlement of $142 million earlier this summer, and sought $22.5 million (15.8 percent) for themselves in fees.  Eventually, both sides agreed to $90 million instead. 

And then the judge scratched beneath the surface.  The plaintiffs’ expert estimate called for $28 million in “preventative maintenance,” including the cost of future labor, parts, towing, and loaner cars.  But the judge reduced this amount by more than half – to $13.1 million, because towing and loaner cars are already covered by the dealer, making the inclusion of these fees in the settlement redundant and without benefit to the consumer.  Further, the Court would be double counting if it agreed to damages for both avoiding future repairs and the declining car value if it has water damage. 

“While the two components address different consequences of the avoided water damage,” said Judge Shwartz, “one of the two will never come about because the maintenance avoids it.” 

Shwartz also recognized that it was improbable that 100 percent of eligible class members would claim their award, and further reduced the settlement.  $69 million, with thirteen percent of it reaching the trial lawyers instead of fifteen percent, was what the Judge ultimately decided was appropriate.  In what could be a warning to other litigators, she noted that the two years spent on recovery and three year period from the time the complaints were filed was untimely, and that the settlement didn’t “represent a particularly speedy resolution.” 

The New Jersey Law Journal reports that the Court received over 200 objections to the settlement.  Many class members felt that that the settlement did not adequately compensate them, and that the attorney fees were still too high. 

In the end, Volkswagen owners will probably have to pay some of their repair costs out-of-pocket with cash.  But, thanks to the Judge, the trial bar will have less cash to line their pockets with, too. 

Sunday, August 08, 2010

August 8th round up

No “California Girls  vs. California Gurls” lawsuit

MTV is reporting that, despite the New York Post’s suggestion, The Beach Boys will not be suing singer Katy Perry over her song “California Gurls,” which, they warned, is reminiscent of their 1965 song “California Girls.” 

(I wonder when an attorney will flirt with a similar “warning” on behalf of Ace of Base to Lady Gaga – i.e. “Don’t Turn Around” vs. Alejandro”). 

And now, of ACTUAL importance...

U.S Magistrate Judge Patty Shwartz uses thoughtful rationale in cutting attorneys’ fees for a multi-million dollar class action verdict against Volkswagen.  Check back here next week for more in-depth analysis. 

Tuesday, July 13, 2010

Around the web, 7.13.10

Small Businesses Pay 33% of Rising Tort Costs Out-of-Pocket

Insurance Journal

July 9, 2010

A new study from the U.S. Chamber of Commerce shows that small businesses shoulder a sizable burden of the nation's tort liability costs, having paid $105.4 billion in 2008— a third of it out of their own pockets.

According to the report, small businesses bore 81 percent of business tort liability costs but took in only 22 percent of revenue.

The study, Tort Liability Costs for Small Businesses, also found that small businesses ($10 million or less in annual revenue) paid, collectively, $35.6 billion of these costs out-of-pocket rather than through insurance.

The study was conducted for the Chamber's Institute for Legal Reform (ILR) by NERA Economic Consulting.

Parasitic Tort Lawyers

By John Stossel  | The Creator.com

July 7, 2010

Tort lawyers lie. They say their product liability suits are good for us. But their lawsuits rarely make our lives better. They make lawyers and a few of their clients better off — but for the majority of us, they make life much worse.

Automated Debt-Collection Lawsuits Engulf Courts

By Andrew Martin | The New York Times

 July 12, 2010

As millions of Americans have fallen behind on paying their bills, debt collection law firms have been clogging courtrooms with lawsuits seeking repayment.

Few have been as prolific as Cohen & Slamowitz, a Woodbury, N.Y., firm that has specialized in debt collection for nearly two decades. The firm has been filing roughly 80,000 lawsuits a year.

With just 14 lawyers on staff, that works out to more than 5,700 cases per lawyer.

How is that possible?

The answer to that question is at the heart of a growing debate over the increasing use of the nation’s legal system to collect on bad debts.

Like many other firms, Cohen & Slamowitz relies on computer software to help prepare its cases. While many of the cases represent legitimate claims, critics say the lawsuits are too often based on inaccurate or incomplete information about the debtor or the amount owed.

Already, some state legislators and judges have tried to crack down on collection lawsuits, and on Monday, the Federal Trade Commission weighed in, saying the system for resolving disputes over consumer debts was broken and in need of “significant reforms.”

Monday, July 05, 2010

McDonald’s can’t seem to shed its magnetism for outrageous lawsuits

It isn’t hot coffee this time, or a customers’ shock upon learning that eating fast food can contribute to weight gain.  At issue is the restaurant chain’s marketing of “Happy Meals” to children. 

Most Americans know that McDonald’s routinely includes a small toy in its Happy Meals.  From what I remember, they were usually coordinated to mirror whatever Disney flick or pop culture interest was significant at the time. 

A citizen watchdog group called The Center for Science in the Public Interest announced that intends to sue the McDonald’s corporation – over the toy.  The compelling plastic figurines are so irresistible, the group’s spokesperson says, that the five and six year olds to whom they are marketed are duped into making poor health choices. 

It’s not the contents of the meal itself, says the group.  “It’s the technique you’re using to get kids to buy the meal.”

Is the gravitational marketing pull of Happy Meals to children so strong that it completely overtakes parents’ choices?  You know, the adults (theoretically non-seducible by Happy Meal toys), who actually hand over the money?

The lawsuit contends that McDonald’s marketing practices are illegal under the consumer protection laws in Massachusetts, Washington, D.C., California, and – surprise – New Jersey. 

Monday, May 24, 2010

Regarding "Best advocacy companies can buy" (Your Views, May 5)

Senator Cardinale had a great letter-to-the-editor in the Record last week:

“I find it interesting, yet unsurprising, that a self-described medical malpractice attorney doesn't want to address initiatives that will help bring much-needed economic growth to New Jersey…

“The letter writer said that "money and power cannot get in the way of justice." He conveniently ignores the facts. Consumers don't have to be defrauded in order to file a lawsuit against our businesses under the current consumer fraud act. Trial lawyers can easily prey on New Jersey's businesses, large and small, because we've made it so easy to cash in on settlements. There's nothing just about multimillion-dollar settlements rivaling the state lottery being paid out at the expense of our state's businesses and the thousands of people they employ across New Jersey.

According to the Healthcare Institute of New Jersey, it takes over $1 billion to develop a new health care treatment. Instead of investing in further research and development, multimillion-dollar awards — like the $25 million-dollar award to an Alabama resident — the trial bar is turning New Jersey's pharmaceutical industry (once called "the nation's medicine chest") — from an asset into a liability.

You can read Senator Cardinale’s (R-39) entire letter-to-the-editor here. 

Thursday, May 06, 2010

Update: A-1064 passes unanimously out of Assembly Consumer Affairs Committee; Assembly Health and Senior Services committee unanimously moves A-1990

A-1064, sponsored by Assemblyman Reed Gusciora, eliminates award of attorneys' fees, filing fees and costs of suit for technical violation of the consumer fraud act.

A-1990, sponsored by Assemblyman Herb Conaway and Assemblywoman Connie Wagner, grants civil immunity to certain volunteer physicians, nonprofit clinics, and Federally Qualified Health Centers (FQHC). 

NJLRA supports both measures and thanks Assemblyman Gusciora, Assemblyman Conaway, and Assemblywoman Wagner for their sponsorship of their respective bills. 

Wednesday, May 05, 2010

Assembly Health & Senior Services Committee to hear A-1990 Tomorrow – Assembly Consumer Affairs scheduled to hear A-1064

The Assembly Health & Senior Services Committee will convene at 10 am tomorrow in Committee Room 16 of the Statehouse Annex.  Among the bills up for consideration by the Committee is A-1990, sponsored by Chairman Herb Conaway and Assemblywoman Connie Wagner.  It would provide immunity from civil liability to certain retired physicians who volunteer their medical services at nonprofit clinics and Federally Qualified Health Centers (FQHC).  It would also provide immunity to these clinics and FQHCs with respect to the care or treatment provided by the physicians.

The Assembly Consumer Affairs Committee will also be meeting at 10 am tomorrow, in Committee Room 13 of the Statehouse Annex.  They are scheduled to hear A-1064  sponsored by Assemblyman Reed Gusciora.  A-1064 eliminates the awarding of attorneys' fees, filing fees, and costs of suit for technical violation of the consumer fraud act.  NJLRA supports both of these bills. 

Monday, April 19, 2010

Read NJLRA's Op-Ed in today's Bergen Record!

Tuesday, April 20, 2010
THE RECORD
Marcus Rayner is the executive director of the New Jersey Lawsuit Reform Alliance.

AS NEW JERSEY’S unemployment rate hovers around a regionally high 10 percent, our businesses face a stagnant economy coupled with high business costs, and our state and local governments must address significant spending cuts, some may not realize that New Jersey’s economy is taking another serious hit – from frivolous litigation.

According to Forbes Magazine, New Jersey is “one of the worst places to get sued in America.”

The American Tort Reform Association has listed New Jersey in its Top Five “Judicial Hellholes” for the third consecutive year. And that’s not an overstatement: For many high-tech, bio-tech and research-based companies, one frivolous lawsuit can spell financial ruin, and send ripple effects through our struggling economy.

Consider this: Consumers do not have to be defrauded in order to file a lawsuit under New Jersey’s Consumer Fraud Act. They don’t have to ask for a refund before suing in court, either. Warnock Dodge found this out when a customer believed she was overcharged by $40 and immediately marched to court. New Jersey courts also welcome out-of-state plaintiffs.

In one such case, an Alabama resident who claimed a popular acne medication gave him inflammatory bowel syndrome received a $25 million judgment – money he will take with him to Alabama.

Go to complete Op-Ed.

Wednesday, April 07, 2010

Is Honda the new Toyota?

Last week, The Star-Ledger reported that motorist Jon Alin may proceed with his class-action lawsuit against Honda, in which he claims that the company knowingly sold cars with defective air conditioners and refused to pay for their repair. 

According to Businessweek, Alin was reportedly tipped off by a Honda technician’s statement that the broken air conditioner in his leased 2006 Odyssey is a “common problem.” 

U.S. District Judge Katharine Hayden dismissed Alin’s claims of “breach of implied warranty and unjust enrichment,” but Alin may proceed with claims that Honda violated the New Jersey Consumer Fraud Act and committed common law fraud. 

Since the lawsuit includes Hondas and Acuras sold or leased between 2000 and 2009, the potential cost to Honda – and profit for the plaintiffs’ attorneys – is huge. 

While air conditioner fraud may seem mundane, you may recall that the recent push by the plaintiffs' bar to cash in off of  litigation against Toyota began with recalled floor mats.  Let’s hope that litigation against Honda doesn’t take a similar path – for consumers’ sake. 

Thursday, March 04, 2010

Lawyers to Business: We're Special

Making more clear than ever where they stand in the debate on civil justice reform, lawsuits and consumer rights, the NJ State Bar Association today supported legislation that would allow delinquent debtors to sue creditors and debt collectors for "unfair" and "unconscionable" debt collection practices - as long as the creditor is not a lawyer.

That's right - lawyers want themselves carved out of the legislation; again.

A-1700, the "New Jersey Fair Debt Collection Practices Act" seeks to mimic federal law in New Jersey and "eliminate abusive practices in the collection of consumer debt."  It is vaguely worded (one can violate it for "unfair debt collection practices," for example) and would allow the awarding of punitive damages if the court deems them warranted.  

The bill is flawed to begin with, but this particular piece of legislation includes creditors, not just debt collectors.  That means that major corporations, small businesses, professionals and contractors can all be sued and fined under this bill for "unfair" debt collections.  Think about that. Businesses risk a lawsuit by collecting monies they're owed, but creditors with a law degree would be exempt.  Where's the fairness here?

The bill is scary enough that lawyers want a carve-out for themselves, but not for anyone else.

If you think this bill won't create lawsuit abuse, think first about why lawyers would support it without them in it...and then read this article in the Dallas Observer about debtors who game the system to sue debt collectors rather than repay their debts.

But don't worry, the lawyers will get their money. 

Wednesday, March 03, 2010

Important Legislation before Assembly Consumer Affairs Committee

The Assembly Consumer Affairs Committee tomorrow will consider an important piece of legislation which will help protect business owners from abuses of the Consumer Fraud Act.  A-1064, which was introduced by Assemblyman Reed Gusciora (D-Mercer), seeks to eliminate the award of attorneys’ fees, filing fees, and costs of suit for technical violation of the consumer fraud act. 

New Jersey's consumer fraud act is one of the most abused in the nation.  This bill is an important first step toward strengthening the CFA to protect consumers from fraud while allowing honest businesses to serve consumers free of the threat of frivolous lawsuits

Right now, New Jersey businesses can be sued under the consumer fraud act for honest mistakes which have no impact on the quality of goods or services produced.  With this legislation, the Legislature would be sending a strong message: New Jersey businesses and consumers should not be expected to pick up the tab for frivolous litigation.  The weaknesses of New Jersey’s consumer fraud act should not be borne on the backs of our hardworking men and women business owners. 

NJLRA has been advocating for changes to New Jersey’s Consumer Fraud Act and applauds Assemblyman Gusciora for introducing A-1064.  We look forward to this legislation receiving a favorable vote in committee.

Monday, March 01, 2010

I’ll take a lawsuit with that

A potential class action lawsuit against the Blimpie sandwich chain is looming in Madison County, Illinois, a fellow Judicial Hellhole.  According to two customers, the sandwich makers did not put enough meat on their “Super Stacked” subs.   Their lawsuit alleges that Blimpie’s claim of “double portions of meat” on these premium-priced subs is false, even though they concede that there is no “regular” sub on Blimpie’s menu for comparison.  The court must now decide if this amounts to statutory fraud. 

The classic image of a dissatisfied customer seems to be becoming a thing of the past, as more dissatisfied customers opt for multi-million dollar litigation over refunds (See Bosland vs. Warnock Dodge).  For its part, Blimpie said on its website that it would have been happy to handle the customers’ complaints at the store level. 

According to Keegan Hamilton’s report in the RiverFront Times News Blog, the plaintiffs’ lawsuit was filed by the powerful LakinCapin law firm in Wood River, Illinois.  The attorneys hope to make it class action suit, which would allow anyone in Illinois who believes that Blimpie short changed their sandwich meat to receive “compensation for costs and attorney fees and other relief deemed “just and appropriate.” 

TheTelegraph.com offers the following insight about the case on their website:

“Courts today are too often becoming the first bastion, not the last, for resolving consumer complaints.  We can only imagine what’s next.  Will it be Maxwell House because one cup of coffee wasn’t good to the last drop?  Or Burger King, because maybe somebody really can hold a Whopper with only one hand?”

Blimpie_sliders

Imagine how much meat the plaintiffs will be able to buy if they are successful. 

Wednesday, February 17, 2010

In Atlantic County, the trial bar hits the jackpot, and consumers pay - again

Atlantic County added another case to its “Judicial Hellhole” resume yesterday, by awarding $25 million in compensatory damages to an Alabama man who claimed Accutane caused his inflammatory bowel syndrome.  Yesterday’s verdict in state Superior Court in Atlantic County was a retrial of a 2007 verdict, in which the defendant was awarded $2.6 million in damages. 

It took the jury just 3 ½ hours to decide that the plaintiff deserved the award.  By comparison, they found that his medical expenses warranted an award of $159,000.

The plaintiff’s lawyers argued that New Jersey-based Roche, which manufactured Accutane, failed to provide an adequate warning about the acne medication’s potential side effects.  By not listing “inflammatory bowel disease” on the warning label, they claimed that Roche violated New Jersey’s Consumer Fraud Act. 

Accutane was introduced in 1982 and is credited with helping millions of people who suffer from severe acne. 

A $25 million warning label is a hefty pricetag for Accutane’s consumers to bear.  Unfortunately for consumers, though, the trial bar was able to claim an additional victory; faced with the threat of an additional 1,000 lawsuits with similar claims and the high cost of defending personal injury lawsuits, Roche discontinued Accutane in June 2009. 

Thanks to weaknesses in New Jersey’s Consumer Fraud Act, an Alabama resident’s litigation was able to help drive a popular medication from the marketplace. 

Monday, February 01, 2010

Around the web: Customers Impacted by New Jersey District Court Decision

Marcus is quoted in Paul Williamson’s article in the Ocean County Examiner, regarding the United States District Court for New Jersey’s decision in a class-action lawsuit involving AT&T.  The decision found that AT&T’s flat-rate early termination fees were unlawful, to the tune of $16,000,000.00

Tuesday, January 26, 2010

Federal Consumer Protection Agency

Susan Antilla writes of President Obama’s intention to establish a federal financial protection agency for consumers.  According to the proposal’s language, it would seek to prohibit marketing and advertising that is “unfair, deceptive, or abusive,” essentially reliving the industry from self-regulation. 

Unsurprisingly, critics (including the U.S. Chamber of Commerce) argue that the proposed Consumer Financial Protection Agency Act (CFAA) is a death sentence for small companies and expensive for consumers. 

Antilla’s op-ed offers some quotable analysis: “Regulators who oversee safety and soundness are motivated most of all by the desire to have the institutions they supervise be profitable.  But profits often come in the form of usurious rates and excessive fees.” Conversely, if a federal CFAA is enacted and brakes are put on what the trial bar feels are abusive or deceptive practices, “it could take a real bite out of the available scandals for people like me to write about.”  Not to mention the viability of businesses already struggling to stay afloat.    

You can read Susan Antilla’s op-ed here.  She is also a Bloomberg News columnist. 

Thursday, January 14, 2010

California Governor’s Job Creation Proposals Could Work in the Garden State

As he enters his final year in office, California Governor Arnold Schwarzenegger has outlined an innovative strategy to spark the job creation his state’s economy so desperately needs.  And it starts with tort reform. 

“California’s current litigation laws lead to large settlements with little value to consumers, but become worth millions to lawyers at the expense of California businesses,” said Governor Schwarzenegger in a statement following his state-of-the-state address. 

In order to help California recover from its double-digit unemployment and declining business community- a situation eerily familiar in New Jersey-  the Governor announced his intention to push for a series of legislative and statutory changes.  They will include a cap on punitive damage awards- which he notes are “wildly unpredictable” among similar cases in California, changes to the rules governing class-action and product liability lawsuits, and requiring plaintiffs rather than defendants to subsidize notification to potential class members.  The last would be particularly important because current statutes hold businesspersons liable for defective products, even if the seller had no knowledge or control over the defect. 

Schwarzenegger’s model for these proposals is his state’s Medical Injury Compensation Reform Act, which was enacted in 1975.  Noneconomic damages are capped at $250,000.  It has been widely credited with keeping malpractice insurance premiums in check and keeping primary and specialty doctors in California. 

“I know that if we can recreate the teamwork we built last year and focus together on these priorities… California will emerge from these difficult times stronger and more vibrant than ever,” he said. 

Schwarzenegger is a Republican Governor who must work with a Democratic-controlled Legislature in order to advance any proposals – just like incoming Governor Chris Christie. 

Democratic and Republican leaders pledged their willingness to cooperate in order to help New Jersey rebound from its economic crisis.  Perhaps this will be a golden opportunity for Governor Christie to introduce tort reform in New Jersey. 


Thursday, October 22, 2009

Paying for your own funeral under the New Jersey Consumer Fraud Act

The New Jersey Law Journal yesterday carried this story (subscription req.) titled "U.S. Justices Put Off by N.J. Order That Defendant Foot Class-Notification Bill" in which NJLJ reporter Henry Gottlieb covers the concerns of U.S. Supreme Court Justices over a NJ judges' ruling that the defendant in a class action suit should cover the cost of notifying class members of the suit.  Newcomer Sonya Sotomayor joined Chief Justice John Roberts and Justice Anthony Kennedy in the opinion, which stated, in part:

"To the extent that New Jersey law allows a trial court to impose the onerous costs of class notification on a defendant simply because of the relative wealth of the defendant and without any consideration of the underlying merits of the suit, a serious due process question is raised,"

Gottlieb points out in the story that "unlike federal class action law that puts the onus on plaintiffs to pay the cost of notification, New Jersey court rules give judges latitude to allocate notification costs among the litigants." 

So, according to at least one judge in New Jersey, if you are sued in a class action you, the defendant, must pay the costs of notifying the plaintiffs of the suit.  And under New Jersey law, this could happen to anyone. 

Kudos to Sotomayor, Kennedy and Chief Justice John Roberts for calling attention to this serious flaw in NJ's law.  The Supreme Court had merely denied cert (declined to hear the case) and it required no further comment.  The fact that they took the time to note the deficiency of NJ's consumer fraud law is remarkable.  

For the record, Gottlieb's story includes the statutory language in question:

"Under R. 4:32-2(b)(3), the cost of notice may be assessed against any party present before the court, or may be allocated among parties present."

Wednesday, October 14, 2009

PNC Bank accused of Bullying, While Unemployment Still Rising in New Jersey

New Jersey is again making national headlines.  A Jersey City resident is suing PNC Bank for its ‘abusive’ overdraft policies and violating New Jersey’s Consumer Fraud Act.  The Associated Press reports that the lawsuit accuses the bank of posting transactions in a ‘highest to lowest dollar amount,’ instead of chronologically, in order to collect overdraft fees.  Writing for The Washington Post, Michelle Singletary offered an uncanny, non-legal solution:  

[It’s] wrong for customers to complain about overdraft fees that they can largely avoid -- by keeping track of what's in their accounts and not overspending.

The suit seeks an end to PNC’s practices, as well as the return of "improper fees" paid by New Jersey residents over the past six years.

Meanwhile, NJBiz released a report today indicating that New Jersey’s unemployment rate has reached 9.8%.  João-Pierre Ruth notes that while New Jersey’s job losses for the month of September were relatively comparable to the rest of the nation, a disproportionate amount of those jobs were lost in the private sector. 

You can view the full table of September’s job losses on the Department of Labor and Workforce Development website. 

Wednesday, August 26, 2009

Warning Labels May be Required on Hot Dog Packages

Want to make a point? Why not file a lawsuit in New Jersey? 

New Jersey is making national headlines again this summer.  This time, it’s because an advocacy group thinks that New Jersey residents need a little extra help when they decide on their cuisine. 

The Washington, D.C.-based advocacy group filed a class action lawsuit under New Jersey’s Consumer Fraud Act on behalf of three of its most prized residents, who claim that they didn’t know eating hot dogs could be bad for their health.  The lawsuit was filed against Nathan’s Famous, Kraft foods/Oscar Mayer, and Sara Lee, alleging that the hot dog manufacturers failed to warn New Jersey residents that hot dogs are linked to colorectal cancer.  Whether any of these three residents actually suffer from colorectal cancer - or whether hot dogs cause it -  is irrelevant.  Going forward, the group wants to see cancer warning labels – the kind you find on cigarette cartons – on all hot dog packages sold in the Garden State. 

Why not push for a nationwide label?  Could the group be suggesting that hot dogs sold in New Jersey are more harmful than hot dogs sold in any other State?  Are New Jersey residents less astute about the perils of hot dogs than residents of New York and Oklahoma?  Did the hot dog manufacturers actually commit fraud? 

No, of course not.  New Jersey is simply an attractive place – to sue.   

Tuesday, August 18, 2009

When Size Matters

A New Jersey appeals court ruled last week that a lawsuit filed against the makers of the dietary supplement Relacore is not appropriate for class-action status.  The original plaintiff, Melissa Lee, alleged that she purchased Relacore in 2004 based on advertisements which claimed the product would reduce belly fat; her weight increased instead. 

The Court wisely asserted that Relacore users might have bought the product for a host of reasons other than weight loss, including claims that it would enhance mood and reduce stress.  A casual suggestion from a friend could have also prompted a purchase by some users, and the product’s efficacy in conjunction with a user’s overall health warrant consideration, after all.   Proving which advertising claim led each class member to purchase the product would be impossible.  Moreover, at a cost of $40 - $120, it was unlikely that users of this product would sue individually (Lee v. Carter-Reed Company, A-4598-07). With such notably small consumer losses, it does suggest that this case really isn’t about the plaintiffs’ money. 

Ms. Lee sought certification of a class of all New Jersey residents who purchased Relacore since it first went on the market in 2002, alleging that advertising by its manufacturer, Carter-Reed Company, violated the New Jersey Consumer Fraud Act.  It’s worth noting that while it originated as a putative nationwide class action suit, the class was later narrowed to include only New Jersey buyers.  Carter-Reed is based in Utah.  New Jersey has become a hotspot for litigation tourism in recent years, as our civil justice courts are comparatively favorable for would-be plaintiffs.  Kudos to the appeal court for clearing one more frivolous case from New Jersey’s dockets.

Friday, May 08, 2009

Assemblymen Respond to Bosland vs. Warnock Dodge

Some of you may recall the New Jersey Supreme Court's decision in Bosland v. Warnock Dodge, where the Court found that a consumer has no duty to first request a refund of an alleged overcharge before filing suit under the NJ Consumer Fraud Act (CFA).  NJLRA had filed an amicus brief in this case on behalf of the defendant, Warnock Dodge.

As some readers may know, the CFA in New Jersey requires guilty parties to pay treble damages and attorney's fees.  Of course, innocent parties still must shell out for their own attorneys' fees, even for minor cases. 

In the case of Rhonda Bosland, she alleged that Warnock Dodge overcharged her for Motor Vehicle Commission fees on a car sale by less than $100.  While most of us would simply drag ourselves down to the dealer and ask for our money back, Ms. Bosland filed suit as her first resort.  The Court reasoned that this is appropriate, citing a concern that in large fraud situations a business could refund only the money of the people who speak up and continue to defraud the majority of consumers.

The problem with this is that it leaves innocent retailers who make honest billing mistakes open to abusive lawsuits.  The decision addresses the lowest common denominator, at the expense of the vast majority of businesses in the state.

Not surprisingly some, including NJLRA, disagree with the Court's reasoning.  Assemblymen Michael Patrick Carroll and Rick Merkt also found the Court's decision flawed and have introduced legislation (A3929) that "requires aggrieved persons to request refund prior to commencing suit under consumer fraud law under certain circumstances."

NJLRA will follow this bill closely and keep you posted.